The Praized Blog

On the second day of the Kelsey Drilling Down 2008 Conference, we heard from Rich Barton, Chairman and CEO, Zillow. He exposed us to his thesis that lead to the various projects he’s been involved in in the last 10 years. Before founding Zillow, Barton founded Expedia when he was at Microsoft. His basic thesis is that transparency of information is power. This leads to a consumer revolution in various verticals, releasing things that were locked-up, especially around big financial decisions. He mentioned stockbroking, travel and real estate as three verticals that were forever altered by the arrival of the Web. He also mentioned three other companies he’s involved with in the following verticals: Legal (Avvo.com), Healthcare (Realself.com), and Employment (Glassdoor.com).

(picture: zillow.com)

He finished his presentation with a “Power to the people” manifesto that’s very telling in this user-generated content age:

• Consumer crave information and power
• If it can be known, it will be known by all (the web causes transparency)
• If it can be rated, it will be rated
• If it can be free, it will be free
• Professionals who are active players in the new vertical marketplaces win
• There can be no vertical marketplace without community
• The digital media model rules (local is giant)

Just read this interesting snippet of information regarding Microsoft’s current R&D efforts in social networking

One project, known as Salsa, aims to use one’s corporate data to piece together their social network, or at least their network of co-workers. In its current form, the software is a plug-in to Outlook that shows social-networking information such as a photo and profile next to an incoming e-mail message. The program also pieces together a list of “friends” based on e-mail frequency and other data.

The Associated Press also reported on this news and added that Salsa”(..) integrates public social networking data such as Facebook.com entries, Twitter.com activity updates, and other information into the email windows of Microsoft Corp.’s Outlook email application. The tool allows people writing and responding to email to know more about the up-to-the-minute status of people they are corresponding with.”

What it means: finally, Microsoft is starting to explore the social networking power of Outlook, possibly the place where most people live their online social lives. I remember, at Mix06, Tim O’Reilly asking Bill Gates when they were going to leverage that installed base (”Outlook for many people is a reflection of their real social network”). I wonder if anyone can work on something like that with the Outlook API? There are reams of data ready to be mined in outlook e-mails (travel information, e-com transactions, events, merchant recommendations, etc.) but you need to show consumers you’re bringing lots of value, if you want them to add your plug-in.

Most of my business readings this weekend have been various analysis of the potential Yahoo/Microsoft deal. Unfortunately, I haven’t been impressed by the level of the debate as many of the comments were all about “Microsoft is evil” and its corollary “Google is not”. I was hoping for more level-headed reflections but I think the involvement of Microsoft in the story created a highly-emotional environment in the tech blogosphere.

One of them stood out for me. Tim O’Reilly looked at the big picture and tries to extract some industry meaning, showing once again his crystal ball is one of the most polished in the industry. Talking about industry consolidation in general and Yahoo in particular, he offered:

The web companies that have a chance of surviving as independent entities are those that truly understand and exploit the rules of the new platform: harnessing collective intelligence to build rich troves of data that literally get better the more people use the application, running ahead of any possible competitor simply because of the network effects that pile on to keep them improving faster than any newcomer. Some of Yahoo!s properties (e.g. Flickr) have that characteristic, but Yahoo!’s business as a whole did not. It was ultimately a halfway house on the way to Web 2.0. It’s original business was based on a literal aggregation of user generated content, but it quickly became a more traditional content and services portal. Later companies like Google leapfrogged it by building services that tapped more directly into the native network effects of the Web.

The other important characteristic of the winners, of course, is that they tap into a data stream that really matters. Owning network effects around consumer photos, for instance, is much less powerful than owning network effects around paid search. So one of the key questions we have to ask ourselves going forward is this: what are the major data subsystems of the future Internet Operating System. Location, identity (and social graph), search (and not just web search but also product search, in which Amazon has a very strong position) come to mind. In a lot of ways, finding the data associated with the old vectors who, what, when, where, and how is a good place to start.

What it means: O’Reilly posits that local search (Location + Search) is one of the key elements of the future Internet Operating System. I completely agree with him. I would add that no one has locked the market yet. No one in that field is deeply embedded yet in the Web O/S. So, this still represents a major market opportunity. And the big question remains: who will own “where”?

“Microsoft to Pay $31 Per Share for Yahoo, Totaling $44.6 Billion in Cash and Stock. Microsoft said it sees at least $1 billion cost savings generated by the merger, and intends to offer significant retention packages to Yahoo engineers, key leaders and employees. The software giant said it believes the takeover would receive regulatory clearance and close in the second half of 2008.”

(via Yahoo Finance)

Update: just listened to the conference call. Clearly, vertical search and social media is high on the Microsoft priorities and buying Yahoo! gives them precious assets there. From a local search perspective, mobile was mentioned many times.

What it means: that rumor had been circulating for a long while now. This has the potential to create a powerhouse in local and social. More details during the conference call.

In business blogs everywhere, it’s that time of the year again, when we start looking back at the year that was and we start to forecast what 2008 will look like. In this post, I look back at 2007 and discuss the most significant local and social media news of the year.

1) Facebook

Clearly, Facebook was the number one news of 2007. By allowing anyone to open up an account in the Fall of 2006 (at about the same time they introduced their newsfeed function), Facebook paved the way for the arrival of tech enthusiasts and early adopters/influencers. Silicon Valley got very excited in the Spring and the launch of the F8 platform in May, allowing third-party developers to build applications, brought more excitement. I believe early adopters’ interest in Facebook has peaked (and has even started to decline) but the job is done. More than 55M active users of all ages access the site every month. The social network had a couple of setbacks around the end of the year with the beacon fracas and the launch of OpenSocial by Google but I believe it does not tarnish their luster. Facebook retaliated by opening up their infrastructure. The biggest benefit to the Web in general: Facebook is introducing people to the social web (micro-blogging, blogging, pictures uploading, “friending”), people who will eventually graduate to more complex social applications.

2) The opening up of the social web

Symbolized by the publication of the OpenSocial standard, the web is becoming more social and more open. Additionnally, the announcement by Six Apart that Movable Type, their leading blogging software, is going open source and the launch of the DiSo initiative to create open source implementations of distributed social networking are also important projects. Social will be part of the fabric of the web.

3) The launch of the iPhone and the unveiling of Android

Apple created quite a stir in June by launching the iPhone, a beautiful device that changes the way we see mobile web access. It’s not a perfect machine by any mean (still very closed) but it’s a game changer. The Android mobile platform by Google is also potentially very disruptive and paves the way to an interesting 2008 in that field. Local mobile search, the famous holy grail of local search, is on the verge of becoming reality.

4) The acquisition of Ingenio by AT&T/YellowPages.com

This purchase is a critical move for YellowPages.com and it clearly signals to the rest of the directory industry that call-tracking/pay-per-call will be the unifying standard in local product bundling, allowing a single sales force to sell multiple media formats. In the same vein, Marchex acquired Voicestar earlier this year.

5) The Radiohead “pay what you want” experiment

Even though it wasn’t as radical as industry watchers wanted it to be (Radiohead is still going to release a CD version of InRainbows), this trial by one of the most preeminent alt-rock group generated a lot of discussions in the blogosphere. Consumers were allowed to pay whatever they wanted to pay for the download including not paying at all. ComScore released some disheartening information about the percentage of people who paid for the album but that was quickly shot down by Radiohead’s management. In any case, the music industry needs more bleeding edge experiments like this one to find their future business model(s).

6) Reality check in the local search industry

The last two Kelsey conferences offered a sobering and realistic look at the realities of local search. Local is tough, hasn’t been cracked yet but offers tremendous opportunities. Stakeholders are realizing that partnerships will be needed to succeed. Two senior executives from the print directory industry talked openly about the opportunities and challenges of being a traditional media publisher and it was the first time that we heard that kind of discourse publicly. Google, Yahoo and Microsoft are all courting traditional local media companies that possess large sales forces to help them increase local revenues. I think we’re getting close to the “acceptance” stage of the Internet grief cycle and we should see a lot of action next year on the local search front.

I’d love to get your feedback on 2007 events. Anything important I forgot?

I’ve been thinking about Robert Scoble’s post on Facebook since I blogged about it yesterday. In it, he invites people to become “friend” with him on Facebook (and he does it again in his last post yesterday night). Intuitively, I knew he was unto something and I asked the Praized blog readers to do the same thing (you can do it by clicking here).

Now, I’ve been “friends” with Robert ever since I met him at Google Zeitgeist 2005. We were sitting at the same dinner table and had the occasion to exchange a few words (he’s a great guy BTW!). For those who don’t know him, Robert was one of Microsoft’s technical evangelists. He was part of the Channel 9 MSDN Video team, walking around the Microsoft campus and shooting very informal new product videos. He became extremely popular by having a more balanced view about his employer (more balanced than traditional PR people), sometimes congratulating and sometimes criticizing Microsoft. More info can be found on his Wikipedia profile

Since meeting Robert, he’s been part of my LinkedIn network, and recently I added him in my Pownce network. I obviously added Robert to my Facebook network yesterday afternoon after reading his post (and he accepted it quickly).

Now, if you look in his Pownce public feed, you’ll see that Robert has been micro-blogging about stuff he’s doing. He currently has 1253 “friends”, all early adopters as Pownce is still in beta. In Facebook, he now has 2702 “friends”. Yesterday night, I got a message in my Facebook news feed section. Robert had uploaded a video and
I got an alert about it because he’s in my friends list.

It made me wonder: why would Robert Scoble accept “friends” invitation from people he does not know? Why do you want to be connected to people you don’t know and alert them to stuff you’re doing? And then it hit me! Robert Scoble is media. He’s building his own broadcast network. He understands that media is completely fragmented and, by participating in all these new social communication vehicles (blogging, Twitter, Pownce, Facebook), he’s aggregating readers and viewers,
thereby increasing his penetration and his worth as a media. I’m convinced Robert reaches close to 100% of all early adopters in Silicon Valley (and a good chunk in North America). He now has tremendous influence on “influencers”.

Now, I finally understood why I invited people yesterday to connect to me in Facebook. I am media as well. By writing the Praized blog every day since October 2006, I have become media. And if you are media, you want to build up your “circulation” to increase your influence and by extension, your value. But be aware: you have to accept the reciprocal conversations though. Robert Scoble receives updates from 1253 Pownce friends and 2702 Facebook friends. The noise level is very high. This conversation is not unidirectional.

I have seen the future of media and it’s Robert Scoble.

The Microsoft Virtual Earth team just announced their latest update. It includes a new rendered map style that they’ve been calling ‘hill shaded’ which gives their road style maps the ability to show elevation. You can see what it looks like on their blog.

In addition, all of these cities/regions have new or expanded Aerial imagery and most have textured 3D buildings and cityscapes

Canada: Hamilton, Quebec, Toronto (Montreal is in their next release)

Europe: Toulouse France, Eastbourne UK

United States: Birmingham, Huntsville, Montgomery, Mobile, Phoenix (expanded), Arden, Denver (expanded), Ft. Lauderdale, Jacksonville, West Palm Beach, Tallahassee, Fort Myers, Tampa West, St Petersburg, Coral Gables, Cape Coral West, Pembroke Pines, Orlando, Hialea, Columbus GA, Jackson, Oak Park IL, Rockford IL, Ohare IL, Baton Rouge, Shreveport New Orleans, Metarie, Jersey City, Elizabeth, East Ruth, Newark, Paterson, Brooklyn, Niagara Falls, Portland (expanded), Nashville, Chattanooga, Milwaukee

What it means: Microsoft continues moving towards the creation of a virtual 3D world. I think most people do not see the full value at this point but I’m convinced we’ll be able to do local shopping in MSN Virtual Earth within a three to five-year period.

(via O’Reilly Radar)

Everyscape aims to be able to show you the whole world — both inside and out — from its website. It plans to do this with normal 2D photos. Using proprietary technology Everyscape will stitch these photos together and 3D-ify them. The result is a pan-n-scan world accessible through a Flash viewer.

When looking at their viewer you are presented with small, green arrows that direct you around their representation of the realworld. When you click one of the arrows you zoom though the 3D’d photo (a neat affect). It’s not just outside some of the arrows will take you inside buildings. Throughout the app you’ll see web links and info boxes in the form of small blue circles. You can currently check out San Francisco’s Union Square with the Everyscape
viewer.

To make their representation of the world Everyscape needs to know the lat-long and the orientation of the camera when a picture was taken. This data is used to stitch the photos together and place them in the world. The comparisons to Microsoft’s Photosynth are very obvious. The models generated by Everyscape are less CPU-internsive to generate and require less data, but are not nearly as detailed — given Everyscape’s goal I am not sure that it needs to be. (…)

Everyscape is launching with San Francisco this fall. They told me that they would have ten cities by the end of the year. On the homepage they list San Francisco, Boston, New York , and Seattle as coming soon. They claim that takes three weeks for them to record a city (the same number that MS quoted at Where 2.0) so expect the roster to expand quickly after the initial batch. (…)

Everyscape is still determining their revenue model. They can easily embed advertising and local search into their application. There may be other methods of monetizing their “eye-level search”. Real estate agents would probably love to put their houses up in a viewer like this. (…)

Update: Techcrunch has more information about the various players in this space.

What it means: I had seen the Microsoft technology last year at Mix06 and it really excited me. More players in the field means more opportunities for technology licensing (and better prices!). I think I’ve said before I’m a big believer in 3D visual city navigation. I’m convinced that it will become a new way to do local searches in the future. In the demo above, you can even enter in the Salvatore Ferragamo store!

According to the Taipei Times, Microsoft is in talks to acquire part of the Yellow Pages unit of Chunghwa Telecom Co. If this is true, isn’t it ironic that Bill Gates recently said that “Yellow Pages would be dead within 5 years”?

Went to bed yesterday reading this article from the Seattle Times. The paper reports on a speech Bill Gates gave to some of Microsoft’s top advertising customers. Other than the usual story of newspapers demise, there was an interesting tidbit about print directories.

The traditional Yellow Pages are doomed as voice-activated Internet searches combined with on-screen interfaces on smart mobile devices get better and proliferate, Gates said. The company’s recent acquisition of voice-technology provider TellMe is accelerating the trend. “When you say something like ‘plumber’ the presentation you get will be far better than what you get in the Yellow Pages,” Gates said. “After all, we know your location and so we can cluster [results] around that. … Yellow Page usage amongst people in their, say below 50, will drop to near zero over the next five years.”

What it means: knowing how strong the print directory ecosystem is, I would be very surprised if it became completely irrelevant in the next five years. I’m also surprised Gates would come out so strongly and say their TellMe acquisition means they’re competing directly against directory publishers, especially at a time when people are starting to root for Microsoft to counter FOG. In any case, if you are in the directory space, you have to make sure you’re not solely dependent on one medium. Like the Kelsey Group used to say (and I’m paraphrasing), “don’t sell in the medium, sell in the database”. That means making sure your content can be accessed via different entry doors like print, online, voice, mobile, instant messenging Nintendo Wii, search engines, etc. As entry doors multiply, make sure you hedge your bets by being present in these various access points.